What Economists Expect From Trump’s First Jobs Report

Posted by author February 7, 2025 Jobs

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Topline

The first jobs report since President Donald Trump’s inauguration will come out Friday morning, with expectations calling for another month of solid labor market data but the weakest start to a year for overall job growth since before the COVID-19 pandemic.

Friday is the first jobs report since Trump’s inauguration.

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Key Facts

The Labor Department will release January’s employment update at 8:30 a.m. EST.

Non-farm payrolls are expected to grow by 170,000 from December to January on a seasonally adjusted basis, according to consensus economist forecasts compiled by FactSet.

Economists expect the unemployment rate to come in at 4.1%, where it stood in December.

Forecasts call for average hourly wages to increase by 3.8% year-over-year, equating to a new record hourly rate of about $35.80.

Contra

Consensus calls for another month of wage and job growth and steady unemployment, all signs of a healthy labor market, but there is evidence of slowing expansion. The 170,000 jobs added would be the weakest January total since 2018. The 3.8% pay increase would be the lowest advance since July. The 4.1% unemployment rate would make January the ninth consecutive month of at least 4% unemployment, after the U.S. spent all of Feb. 2022 to April 2024 below that mark.

Tangent

Weather often impacts nonfarm payrolls, and Friday’s likely won’t be an exception: The California wildfires and extreme winter weather will each knock off 20,000 jobs added than typical in January, according to Goldman Sachs.

What To Watch For

How investors will react to the report. It will likely take an “outlier print” of less than 100,000 or more than 250,000 January jobs added to significantly move markets, according to Bank of America economists led by Aditya Bhave.

Key Background

The December jobs update released Jan. 10 caused a significant selloff, as the S&P 500 declined 1.5% to a two-month low and yields for the benchmark 10-year U.S. Treasury rose to their highest level since 2023 (higher bond yields signal less valuable bonds). That came as Wall Street interpreted the better-than-expected December report as a death knell for further interest rate cuts in the near term, and the Fed signaled later that month it had in fact put its rate-cutting plans on the back burner. In short, Wall Street is hoping for lower rates to boost stock market valuations as corporate profit margins would benefit from cheaper borrowing costs, while the Fed is less likely to enact those cuts if the economy and labor market is not in need of a boost.